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CER-T

GCG MEMORANDUM CIRCULAR NO. 2015 - 04

SuBJEcr

DATE :
1.

ReoncnnzaloN, FLAToNALTZATToN ero PeRsor.rrer

Prarururrue rr rxe GOCC SecroR
08APRL2Ol5

PuRPosE ANp LEGAL AurHoRrnr

This Memorandum Circular covers the public policy, guidelines and procedures
followed by the Governance Commission pursuant to its mandate under Republic
Act (R.A.) No. 10149 to actively exercise the State's ownership rights in GOCCs
through the reorganization or streamlining of GOCCs' to ensure that their operations
support national goals.' Corollary thereto, the exercise of the State's ownership
rights must be balanced with the provision ot adequate operational flexibility in light
of the principle of "Board Autonomf' under Article 9-10 of lhe "Ownership and
Operations Manual for the GOCC Sector".'
Towards this end, the Govemance Commission shall ensure that:

(a) The organizational structure and staffing of GOCCs are aligned

with their strategy;
(b) The organizational structure and practices embody the highest
standards of corporate governance, particularly through effective
decision-making processes;

(c) The organizational structure and staffing of GOCCs embody

industry best practices in organizational development and
workforce planning to the extent that these are relevant to the
GOCC's strategy and particular circumstances; and

(d) GOCCs develop the capacity to review and restructure their

organizational structure as a key lever to improving performance.
DEFrNrroN oF TERits.

(a) "Branch Staffing Modet" determines (i) the job

grade of the Head of the

Branch Manager and the officer next-in-rank; and (ii) Personnel Services
budget based on the required personnel based on appropriate parameters
for the GOCC's operations (e.9. projected sales, population density, area)'

t Sec.51a;, R.a. lto. totls.

See Art. 4.5., GCG MC No. 2012-06.
'?
3

GCG Memorandum Circular No. 201246.

2
(b)

Career Bands" refer to relative groupings of jobs to help determine the

nature (i.e., either management or individual contributor) and assess the

"

level of contribution of a particular role in the organization.

(c)

"

Career Levels" are discernible broad steps in a Career Band that reflect

progression of jobs requiring higher levels of competence and knowledge.

3.

"Job Grade (JG)"4 is a numerical representation of the relative

(d)

internal
values of a job in a GOCC's plantilla/staffing pattem, determined by using
quantifiable factors to assess the minimum requirements to perform a job as
defined in the job description. The JG will dictate the Monthly Basic Salary of
the job based on the Salary Structure.

(e)

"

Reorganization or Rationalization" refers to changes in the Organization

Structure and Staffing Pattem geared towards improving the delivery of
services and overall performance of the GOCC. For purposes of this
Circular, no distinction is made between reorganization and rationalization.

oR RATToNALTZATToN PLAN (RP). - Pursuant to the authority

granted under Section 5(a)(6) of R.A. No. '10149, the Govemance Commission
shall approve changes in the Organizational Structure of all GOCCs covered by
R.A. No. 10'149 prior to their implementation. The GOCC shall submit for review
and approval of the Governance Commission a Reorganization or
Rationalization Plan (RP) embodying the proposed changes in the
REoRGANTZATToN

Organizational Structure.
3.1

. Approval

Process. - Applications for approval of the RP shall undergo the

process prescribed by the Govemance Commission, including:

3.1.1 Submission of the preliminary information required in the Citizen's

Charter on the GCG website;

3.1.2 Presentation of the RP to the Governance Commission;

3.1.3 Evaluation by the Technical Working Group (TWG) composed of
representatives of the Governance Commission and the GOCC;

3.1.4 Discussion between the Governance Commission and the GOCC

3.'l

.4

Goveming Board of any issues not agreed upon at the TWG level;
and
lssuance of Memorandum Order by the Governance Commission
authorizing, or of a letter denying the implementation of the
proposed Organizational Structure and Staffing Pattern (OSSP).

3.2. Evaluation Criteria.

The RP shall be evaluated on the basis of the

following major criteria:

3.2.1. Design Framework. - The RP should demonstrate a clear

link
between the GOCC's business strategy and proposed changes in
the OSSP. lt should identify the major criteria that guided the
formulation of the plan. lt should likewise identify success indicators

(SSL)'
Also knowr as "Salary Grade'under the frame\ ork of the Salary Siandardization Law

of the Plan, the annual target for each indicator, and the

units
accountable for achieving the targets. The Goveming Board shall
take the lead in formulating the business strategy and the design
framework, and shall be accountable for the RP.

3.2.2

Design Process. - ln addition to a clear and sound framework, the

RP shall include the following components to indicate that the
GOCC adhered to a transparent and evidence-based process in
formulating the RP:

(a) Current State Assessment.

To ensure an objective and

problems
and needs of the GOCC,
speedy identification of lhe
the Goveming Board shall cause the conduct of a current state
assessment by a third party. The Governing Board shall provide
the Commission the final report of the current state
assessment.

(b) Governance Structure.

To ensure orderly and

efficient
process
process, the GOCC shall at the start of the
issue clear
governance structure in the
guidelines and establish
formulation of the RP in accordance with this Circular.

(c) Participatory Process. - To promote meaningful consultation

and participation of employees and key stakeholders, the

Governing Board and Management shall provide mechanisms

for consultation and participation, establish a governance
structure and guidelines, and define boundaries of decisionmaking. Such mechanism shall include the constitution of a
Change Management Team (CMT), which shall include among
its membership representative from the employees'
association, and which shall have the following functions:

i.

To be the forum where employees and other affected

stakeholders express

their concems

and
recommendations on the manner by which the Governing
Board and Management develop the RP;

ii.

To recommend to the Governing Board and Management

revisions to the final proposed RP to be submitted to the
Govemance Commission;

iii. To cascade to the officers and employees the features of

the RP once it has been approved for implementation by
the Govemance Commission; and
iv. To assist officers and employees whose terms of
employment are affected by the implementation of the
approved RP.

The GOCC's Human Resource unit shall act as the secretariat

of the CMT to ensure proper documentation of the planning and
implementation of the RP.

Nothing herein shall be interpreted to mean that the Goveming

Board shall delegate its decision-making powers or that key
decisions should be anived at by consensus.

(d) Cost-Benefit Analysis - To determine the financial viability of

the proposed changes to the OS, the GOCC shall conduct an
analysis of the revenue and cost implications the proposed
changes and their impact on the financial position of the GOCC.

(e) Workforce Analysis and Planning - The GOCC shall conduct

an analysis of the existing workforce by career band and job
level. lt shall prepare medium-term plan showing projected
staffing levels by career band and job level over the next five (5)
years.

(f) Transition Program for Affected Officers and Employees The RP shall provide for a program to assist officers and
employees affected by organizational restructuring transition to
new jobs outside the organization or new positions within the
GOCC.

3.2.3

3.3.

Compliance to Standards. - The RP should comply with existing

laws, rules or regulations. Parts thereof that are not compliant with
existing laws, rules or regulations shall be invalid even if no
adjustments are made by the Governance Commission and wilhout
prejudice to further action by the Commission on Audit (COA).

Regardless of whether a GOCC has

already undergone rationalization or reorganization with the Governance
Commission, the following organizational hierarchies / lines of authority
shall be mandatory for all GOCCs:

Mandatory Lines of Authority.

3.3.1. The following Officers shall report directly to the Governing Board:
(a) lnternal Audit Officer;
(b) Corporate Secretary;
(c) Corporate Treasurer; and
(d) Compliance Officer.

3.3.2. Nothing herein shall preclude the Governing Board of a GOCC from:

(a)

Designating an Officer within the GOCC, such as but not

limited to the General Counsel, to perform the functions of
the Corporate Secretarys and/or the Compliance fficef
as an additional duty, or other such combinations that will
best serve the interest of the GOCC.
Nonetheless, the designated officer shall report directly to
the Board insofar as the duties and responsibilities of
Corporate Secretary and/or Compliance Officer are

5
6

Section 15.3 GCG MC No.20'12{7.

Section 16.4 GCG MC No. 2012{7

to a salary increase
GOCC's existing compensation

concemed, and may be entitled

pursuant

to

the

framework; or

(b)

Filling up the position of Corporate Secretary by engaging

an individual from the private sector on a part{ime basis,
to be compensated with an amount comparable to
honoraria for actual attendance at meetings in accordance
with the rate for Members under National Budget Circular
2OO7-5107 or the applicable rate for Committee per diems,
whichever is lower, Provided, the total annual cost of the
honoraria shall not exceed 75% of the total annual
personnel services budget for the position of Corporate
Secretary. The individual from the private sector should
have no conflict of interest with the GOCC, and shall be
public officer subject to filing of the
considered
Statement of Assets, Liabilities and Net Worth (SALN) and

other accountability requirements even though not

regular employee of the GOCC.

3.3.3. The highest ranking officers for the following functions shall report
directly to the Chief Executive Officer (CEO):
(a) Finance;
(b) Management lnformation Systems;
(c) Strategic Communications; and
(d) Corporate Planning.
Nothing herein shall preclude the Goveming Board or GCG from
combining the functions of the foregoing Officers into such
combinations that will best serve the interest of the GOCC. Upon
recommendation of the CEO, the Governing Board may issue
orders for the foregoing to be supervised by another Officer before
directly reporting to him/her, but such orders shall apply only during
the tenure of the CEO.

3.4. Authority to lmplement RP. - Upon evaluation of the proposed RP, the
Commission shall issue a Memorandum Order (MO) authorizing the
Governing Board to implement the RP as approved by the Commission.
The MO shall provide among others for the following:

3.4.1. The revised Organizational Structure (OS) or Table of Organization

(ro);

3.4.2. The Job Grade of the Heads and next-in-rank officers of units
provided in the OS/TO;

3.4.3. The staffing model for branches, stores, district offices, or project
management units following a classification system approved by the
Govemance Commission; and
7
Under DBM National Budget Circular No. 2OO7-510, the rate of honoraria shall not exceed 25% of the monthly RATA of ihe
deputy chief operating officei of the collegial body for every meeting actually attended. For the purposes of this Circular, the
ceiling of four (4) paid meetings per month shall not apply.

3.4.4. The total budget for personnel services based on approved Job
Grades of the Heads and next-in-rank officers of units together with
the indicative workforce level/headcount and corresponding
compensation of the various units of the OSffO. Where applicable,
this budget shall be for personnel services in the central office only.
The total budget for personnel services of branches shall be
accounted for separately based on the implementation of the
approved staffing model.

4.

AurHoRrry oF rHE GoVERNTNG BoARp.

4.1. Operational Flexibility. - Pursuant to the provision of adequate operational

flexibility, the Governing Board shall have conditional authority to implement
the actions below provided the same is first reported to the Governance
Commission in the forms required under its Citizens' Charter at least thirty
(30) working days prior to implementation, and there was no communication
from the Governance Commission to the contrary, to wit:

4.1.1. Changes rn Scope of Responsibilities and Reporting Lines. The Goveming Board may change the scope of responsibilities and
reporting lines of organizational units, subject to the mandatory
provisions herein and the Code of Corporate Governance for
GOCCs (GCG MC No. 2012-07), provided, that the creation or
abolition of units or substantive changes in organizational structure
not limited to the creation or abolition of units shall be approved by
the Govemance Commission.
4.1

- The staffing of positions below the Heads and next-inrank officer of units, including the number of job positions, the job
titles, the salary grades, and the number of positions per job title'

.2. Staffing

4.1.3. Titling. - Subject to the formal approval of the Civil Service

Commission (CSC), whenever applicable, the titles of
Organizational Units and Executives may be determined by the
Governing Board, provided the titles clearly distinguish between the
various units and levels in the organization based on size, scope of
responsibility or other relevant parameters. Any changes to the
framework for titling organizational units and Executives must first
be reported to the Governance Commission and the CSC at least
thirty (30) working days prior to implementation.

(i.e. change of rank with

- lncumbent personnel
promoted
job
within the career path
leveligrade) may be
increase in
of the particular item, provided, the incumbent meets the approved
qualification standards of the new rank.

4.1.4. Career Pathing.

Chief Legal
Counsel (l-lll)

Senior Vice'President (VP)

Bachelor of Laws, 6 years

managerial experience

VP

Bachelor of laws, 5 years

managerial experience

Assistant VP

Bachelor of laws, 4 years

managerial experience

4.1.5. Scrap and Build Flexibility. - Obsolete positions may be scrapped

and replaced with new positions to meet new market conditions,
provided the authorized workforce levels for career bands and job
levels is maintained. Chartered GOCCs shall be responsible for
securing from the CSC the applicable Qualification Standards for
newly created positions.
4.

1.6. ReassignmenUTransfer. - lncumbent personnel and/or vacant

positions may be transferred from one unit to another unit or
grouped to form a new organizational unit, subject to compliance
with pertinent Civil Service rules and regulations on personnel
actions.s

4.1.7. Reduction of Workforce. - Positions, whether filled or vacant, may

be abolished when the same are deemed obsolete, redundant or
due to the closure of branches, satellite offices or other equivalent
units, or technological advances.

4.1.8. Abolition of Co-Terminous Positions. - The Governing Board

may implement the abolition of positions classified as co{erminous
with incumbent (CTl) as a result of a Reorganization Plan approved
under E.O. 366 upon satisfaction of the conditions for the abolition
of such positions, provided, no additional positions shall be
classified CTl.

4.1.9. Creation and Closure of Branches. - The Governing Board of a

GOCC that at the time of issuance of this Circular is operating
branches, stores, or project management units shall be authorized
to create new or close such units in accordance with the branch
staffing model approved by the Governance Commission. ln the
case of GOCCs without branches or similar geographical units prior
to issuance of this Circular, the creation of such units shall require
approval by the Govemance Commission and shall undergo the
same process of review as a RP.

See leneral/y Book V, Chapter 5, Section 26(3). E.O. No. 292, s. 1989, defining "TransfeL" See also Omnibus Civil Service
Rules and Reguiations, Rule Vll, Sec. 5 on "Irarste," and Sec. 10 on 'Reassignz'ent "
3

I
4.3. Regulatory lntervention. - The authority of the Governing Board is
without prejudice to the authority of the Governance Commission to
exercise oversight over the GOCC. The Goveming Board must inform the
Governance Commission in writing of its plan to undertake any of the
above actions within thirty (30) working days after the same is approved by
the Goveming Board, or at least thirty (30) working days prior to its
implementation, whichever is earlier. The written report must follow the
forms required in the Governance Commission's Citizens' Charter.

4.3.1 Technical Working Group (TWG) Meeting. - The Governance

Commission may require TWG meetings to make adjustments to
any of the actions above when they compromise the operations or
the financial health of the GOCC, constitute gross abuse of
discretion to the detriment of officers and employees or do not
comply with the standards established herein or that were approved
specifically for the GOCC. The call for a TWG meeting shall
suspend the implementation of the actions in question until the
issuance of a written formal notice that the GOCC may proceed,
subject to any adjustments made.

4.3.2 Organizational Audit. -

Whenever it deems fit, the Governance

Commission may conduct an audit of the organizational structure,
people practices, rewards system and other related matters to
evaluate their effectiveness in achieving the objectives of the
GOCC and the projected business outcomes. On the basis of the
audit results, the Govemance Commission shall direct the
Goveming Board to implement changes in the organizational
structure to address identified gaps and issues and improve overall
performance.

4.3.3. Non-Compliance to Rules and Regulations. - Any action that is

contrary to laws, rules or regulations shall be invalid even if no
adjustments are made by the Governance Commission without
prejudice to further action by the Commission on Audit (COA).

4.3.4. Requirement on Comprehensive and Concise Reporting.

ln

order to facilitate evaluation by the Govemance Commission within

the 30-day period and to avoid repetitive and piecemeal reports that
would render nugatory the approved workforce actions, the GOCCs
concemed should ensure that the reports submitted are
comprehensive and concise so as to cover the desired outcomes
for the entire calendar year. The Governing Board shall perform a
strategic and holistic review of its Organizational Structure and
Staffing Pattem in its annual planning'

5.

Any increase in the budget for personnel

services (annual total compensation for all personnel) resulting from any change
in the Organizational Structure and/or Staffing Pattem shall be charged to
corporate funds. lt shall be prohibited to source payment for the increase from
FuNptNG oF PERsoNNEL SERvlcEs

any of the following:

(a)

Loans;

I
(b)
(c)

Subsidy; and
Sale of assets for the sole purpose of paying the increase in personnel
services budget and not otherwise in the ordinary course of business.

- The Organizational
Structure of newly created GOCCs shall require approval by the Govemance
Commission prior to its implementation. The provisions of this Circular shall also
cover applications for approval of a new Organizational Structure and Staffing
Pattem.
ORGANTZAnoNAL SrRUcruRE oF NEwLy CREATED GOCCS.

7.

EARLy RETREMENT lNcENnvE PRocRAM ANp SEpARArtoN PAy.

The applicable

Early Retirement lncentive Program (ERIP) and Separation Pay shall be

pursuant to existing laws and regulations.
8.

- All reports required herein shall follow the checklist

forms
in
the Citizens' Charter section of the Governance
documents
and
of
CHEcKLrsr oF DocuirENTs.

Commission's website.

9.

Each GOCC is encouraged to procure the consulting

services of reputable HR consulting firms, companies or individual consultants,
as well as market information that may be used for external benchmarks for the
operations of the GOCC. The engagement shall ensure knowledge and
technology transfer in line with the Government Procurement Reform Act (R.A.
No. 9184). The expenses that will be incurred in procuring the services of such
expert individuals or institutions shall be considered as necessary expenses of
the GOCC.

't0.

TRANS|ToRY PRovrstoNs.

RETATNTNG ExpERTrsE.

10.1. All GOCCs shall submit the required workforce analysis reports following
the forms in the Citizens' Charter of the GCG website within three (3)
months from the effectivity of this Circular. The workforce analysis reports
shall identify the business outcomes / performance measures of each unit,
and group existing staff into the following career bands and job levels

(a) Management,

which consists of the following career bands:

i. Executives; and
ii. Middle ManagemenVSupervisors.

(b) lndividual Contributors, which consists of the following career

bands:
Professionals:

i.

ii.

Customer/Client Management;
iii. Sales Staff;
iv. Technical SuPPort Staff,
v. General Staff; and
vi. Labor.

10.2. lndividuals under contracts of services/Job orders shall also be grouped

accordinglY.

10

10.3. All vacant positions shall be excluded from the grouping, except for those
that have been identified as still relevant and have been vacant for not
more than six (6) months.
10.4. Total Cash Compensation (total guaranteed compensations plus variable
pay) for each Job Level and within each career band shall also be
reported for costing analysis.
10.5. The filled positions within each GOCC and all positions that have only
been vacant for not more than four (4) months from the effectivity of this
circular shall be deemed the authorized workforce level of the GOCC, and
all other vacant positions shall be deemed abolished.
10.6. Goveming Boards may exercise the conditional authority herein only after
sixty (60) working days from the time their workforce analysis reports are
received by the Govemance Commission.

11. EFFEcflvrw. -This Circular shall take effect immediately upon its publication in a
newspaper of general circulation and on the Govemance Commission's website
at www.gcg.gov.ph.

Chairman

.A.tr#,FrK

'BVVriv
/

rtoReNcto

B. ABAD
DBM Secretary

--

RAINIER B. BUTALID
Commissioner

Total Guaranteed CompensaUon refe.S to basic guaranteed cornpensation duS fixed cash allowances.